Eurozone inflation down for third month running

The Associated Press

Posted:
04/03/2013 03:01:35 AM MDT

Updated:
04/03/2013 03:35:57 AM MDT

Click photo to enlarge

Unemployed people gather on a street and hold a banner reading, ''More unemployment. Less protection. Poverty. Exclusion'' while a woman shelters by the rain in Pamplona northern Spain on Tuesday, April 2, 2013. Spanish government figures show that the number of people registered as unemployed edged down by a little under 5,000 in March, the first reduction for the month in five years. The scale of the task remains huge though as the number registered as unemployed stands at 5.04 million. Spain is battling to emerge from its second recession in just over three years.

BRUSSELS—Inflation across the 17 European Union countries that use the euro fell for the third month running in March to its lowest level in nearly three years, official figures showed Wednesday.

Eurostat, the EU's statistics office, said consumer prices in the eurozone were up 1.7 percent in March from the year before, its lowest rate since August 2010 and down from 1.8 percent in February. Weaker energy price inflation was one of the main reasons behind the fall.

Though the decline takes inflation further below the European Central Bank's target of keeping price rises just below 2 percent, no change in interest rates is expected at Thursday's monthly policy meeting.

The ECB has been reluctant to take its main interest rate below the record low of 0.75 percent even though the eurozone is in recession and inflation has dropped.

"Despite muted inflationary pressures and mounting signs that the already weak eurozone economic situation is deteriorating anew, the ECB still looks likely to hold off from cutting interest rates," said Howard Archer, chief European economist at IHS Global Insight.

The decline in inflation in March was widely expected, though some economists were anticipating a bigger drop to 1.6 percent, as prices continue to be weighed down by the recession and high unemployment, which, among other things, keeps a lid on wages and consumer spending.